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Decades of nuclear materials production at the Department of Energy's (DOE) Savannah River Site in South Carolina have left 37 million gallons of radioactive liquid waste in 49 underground storage tanks. In December 2008, DOE entered into a contract with Savannah River Remediation, LLC (SRR) to close, by 2017, 22 of the highest-risk tanks at a cost of $3.2 billion. GAO was asked to assess: (1) DOE's cost estimates and schedule for closing the tanks at the Savannah River Site, and (2) the primary challenges, if any, to closing the tanks and the steps DOE has taken to address them. GAO visited the Savannah River Site and reviewed tank closure documents, as well as conducted an analysis of the construction schedule of the Salt Waste Processing Facility (SWPF), which is a facility vital to successful tank closure because it will treat a large portion of the waste removed from the tanks.

Emptying, cleaning, and permanently closing the 22 underground liquid radioactive waste tanks at the Savannah River Site is likely to cost significantly more and take longer than estimated in the December 2008 contract between DOE and SRR. Originally estimated to cost $3.2 billion, SRR notified DOE in June 2010 that the total cost to close the 22 tanks had increased by more than $1.4 billion or 44 percent. Much of this increase is because DOE's cost estimate in the September 2007 request for proposals that formed the basis of the December 2008 contract between DOE and SRR was not accurate or comprehensive. For example, DOE underestimated the costs of labor and fringe benefits. DOE also omitted certain other costs related to equipment and services needed to support tank closure activities. Moreover, more than $600 million of this increase is due to increased funding needed to make up for significant losses suffered by Savannah River Site workers' pension plans as a result of the recent economic crisis. Closing the tanks may also take longer than originally estimated because of persistent delays and shortcomings in the construction schedule for SWPF. According to SRR, construction delays that have already occurred will result in between 2 and 7 fewer tanks being closed by 2017 than agreed to in the contract. Furthermore, the SWPF construction schedule does not fully meet GAO-identified best scheduling practices. For example, the schedule had problems with excess float time between activities, indicating that the schedule's activities may not be sequenced logically. DOE is exploring ways to mitigate the effects of construction delays by deploying new technologies to treat radioactive waste. However, additional research and development on these new technologies is still required and, therefore, it will be several years before they are deployed. DOE officials identified three primary challenges to closing the liquid radioactive waste tanks at the Savannah River Site: (1) on-time construction and successful operation of SWPF; (2) increasing the amount and speed at which radioactive waste is processed at the Savannah River Site's Defense Waste Processing Facility, which prepares the waste for permanent disposal by mixing it with molten glass and then pouring it into large metal canisters where it hardens; and (3)successful implementation of an enhanced chemical cleaning process that will remove residual waste from the tanks with minimal creation of additional waste that must be treated. DOE officials identified steps the department is taking to ensure these challenges are met. However, several factors raise concerns about whether DOE will be able to resolve them. For example, the enhanced chemical cleaning process that is a cornerstone of SRR's ability to close tanks on time has never been used in liquid radioactive waste tanks and, according to SRR officials, DOE has not consistently funded additional research and development on the technology. Most experts GAO spoke with were generally confident of DOE's ability to successfully overcome these challenges, although some of them identified additional concerns. For example, some experts suggested that DOE has not engaged in sufficient contingency planning in the event that the department's chosen waste removal, treatment, and tank closure strategies are unsuccessful. GAO is making five recommendations to DOE to, among other things, clarify how cost increases should be requested by a contractor, as well as reviewed and approved by DOE and to ensure the SWPF construction schedule conforms to best practices. Although DOE generally agreed with two of our recommendations, they disagreed on the necessity of additional clarity on how cost increases should be requested by a contractor and that the SWPF construction schedule did not conform to best practices. We continue to believe our recommendations are valid.

Recommendations for Executive Action

Status: Closed - Not Implemented

Comments: In November 2010, the Department of Energy issued new contact management guidance, Order 413.3B, that replaced the Department Order we reviewed for GAO-10-816. In July 2011, the Department also issued guidance for applying 413.3B. Neither the Order nor the guidance, however, include specific provisions describing how a contractor should request approval for a cost increase or the specific process and time frame the Department should follow to review and approve proposed cost increases.

Recommendation: In light of continuing uncertainty about the costs and schedule to close underground tanks at the Savannah River Site, the Secretary of Energy should revise department contract management guidance to ensure it includes provisions that detail how contract cost increases should be requested by a contractor and the specific process Department of Energy (DOE) should undertake to review and approve the increases, along with a timetable for such a review to take place.

Agency Affected: Department of Energy

Status: Closed - Not Implemented

Comments: In February 2012, the Department of Energy's (DOE) Office of Environmental Management (EM) issued an Operations Activities Protocol that was intended to prescribe the methodology for planning, managing, and reporting on EM operation activities, which include emptying and closing the Savannah River Site's underground radioactive waste tanks. However, EM's 2012 operations protocol did not include a detailed process by which contract performance baselines are to be reviewed and approved. For example, the 2012 operations protocol states that EM site management is responsible for contract oversight and that this oversight will be accomplished utilizing site level processes and procedures. Furthermore, the 2012 operations protocol states that it is the responsibility of the site office manager to update the contract baseline, but the protocol does not provide details on the change control process that the site office manager is to follow. In addition, GAO's October 2012 report (GAO-13-23) found that EM continues to experience project management problems and recommended that DOE clarify guidance for operation activity projects to specify how and when performance baselines (i.e., for scope, cost, and schedule targets), which EM calls key performance metrics for operations activity projects, are to be established and documented to help ensure consistent assessment of performance.

Recommendation: In light of continuing uncertainty about the costs and schedule to close underground tanks at the Savannah River Site, the Secretary of Energy should revise department contract management guidance to ensure it includes a detailed process by which contract performance baselines are to be reviewed and approved, including appropriate milestones to help ensure that review and approval occur in a timely manner.

Agency Affected: Department of Energy

Status: Closed - Not Implemented

Comments: In February 2012, the Department of Energy's (DOE) Office of Environmental Management (EM) issued an Operations Activities Protocol that was intended to prescribe the methodology for planning, managing, and reporting on EM operation activities, which include emptying and closing the Savannah River Site's underground radioactive waste tanks. However, EM's 2012 operation protocol did not specify the policies and procedures that DOE will use to oversee EM's operations activities that have been exempted from Order 413.3B, which establishes a stringent set of project controls. Specifically, GAO's October 2012 report (GAO-13-23) found that EM's 2012 operations protocol provide considerable flexibility about what project management principles from Order 413.3B the office applies to operation activities. The protocol clarifies that the five key management review and approval milestones and another control mechanism required under Order 413.3B will not be applied to operation activities. Beyond addressing these specific exclusions from Order 413.3B, EM's protocol states only that project management principles will be applied as appropriate. This lack of specificity makes it difficult for EM and other to accurately assess project performance, among other things. For example, one of the key management review and approval milestones under Order 413.3B is the approval of a definitive scope, cost, and schedule performance baseline. In October 2012, GAO found that EM's 2012 operations protocol omits a number of key elements related to setting scope, cost, and schedule targets in performance baselines. GAO's October 2012 report recommended that DOE develop guidance to supplement DOE Order 413.3B to explain how EM should develop scope targets to help ensure EM and others can accurately assess project performance.

Recommendation: In light of continuing uncertainty about the costs and schedule to close underground tanks at the Savannah River Site, the Secretary of Energy should, in the absence of the requirements of Order 413.3A, specify policies and procedures that DOE will use to oversee Office of Environmental Management activities that have been exempted from Order 413.3A, including Savannah River Site tank closure activities.

Agency Affected: Department of Energy

Status: Closed - Not Implemented

Comments: In March 2012, the Department of Energy reported that it would take no action on this recommendation. Agency officials did not alter this information after further inquiry in July 2014.

Recommendation: In light of continuing uncertainty about the costs and schedule to close underground tanks at the Savannah River Site, the Secretary of Energy should develop guidance for DOE contracting officers to ensure that known costs incurred by contractors, such as retiree health care and essential site services, are assigned to the proper contract for sites whose operations are divided into multiple contracts.

Agency Affected: Department of Energy

Status: Closed - Not Implemented

Comments: In March 2012, the Department of Energy reported that it would take no action on this recommendation. Agency officials did not alter this information after further inquiry in July 2014.

Recommendation: In light of continuing uncertainty about the costs and schedule to close underground tanks at the Savannah River Site, the Secretary of Energy should direct the contractor for the construction of the Salt Waste Processing Facility (SWPF) to revise its construction schedule to ensure conformance with DOE's schedule development guidance and scheduling best practices found in GAO's Cost Estimating and Assessment Guide: Best Practices for Developing and Managing Capital Program Costs.